‘The Resource Curse’, Isn’t South Sudan already there?

By Justin Ambago Ramba

August 15, 2011 – It was a long time ago when the people of South Sudan became aware that they practically sitting right on top of huge reserves of different types of mineral resources. Nonetheless a resource is only a resource when it is put in use, like the oil exploitation currently taking place in parts of this forgotten ‘Eden’ was even started until late.

Ask any school child in Raja, Yambio, Mundri, Kapoeta, Malakal, Akobo, Bor or Parieng as to the natural resources that can be found in South Sudan, and you are in for a surprise for you will hear a long list from Gold, Copper, Uranium, Iron ore, cement……..etc, and of course they believe that the entire land that their grandfathers and fathers fought to liberate is literally floating on a sea of oil.

Others with wider commercial awareness may add things like cattle, timber, water (Nile), fish, and different oil seeds to the list. Until here it is all about raw materials that if managed wisely can provide the necessary money for building the much needed schools, hospitals, roads, houses and the rest of the infrastructure.

But nevertheless this article is intended to raise the important question of whether anyone of our over 9 million citizens has ever thought that these vast resources could be associated with a curse. Maybe a few amongst the well schooled, but hardly would you expect the average citizen to look at all these resources and associate them with any ‘curse’. On the contrary the general expectations keep running high.

The idea to initiate this discussion is to shade like on our economic performance over the past six years that marked the end of the second civil war and we intend to raise the public awareness to the fact of ‘The Resource Curse’. The author became deeply concerned after drawing parallels between how the local economic performance was quick to recover following the peace deal of 1972 that ended the first civil war and how the economy continues now to show no any signs of recovery over a similar period of peace as measured by the local food production in the territory that constitutes the newly born state of South Sudan.

Without any prejudice one can rightly say that the impacts of the second civil war had been more severer that the first in as far as the disruption of the social lives and economic activities are concerned, with around four million people displaced from their homes and another more than two million lives lost. Nonetheless the ‘international aid’ and assistance that the South Sudan received following the 2005 peace deal is by far the greatest. It continues to be more than anything the region has ever received in its entire history, not to mention the billions of oil dollars it had access to from the oil revenues shared with the north before becoming an independent country.

And since it came to my knowledge that there exists a proven curse that associates with economies primarily driven by natural resources e.g. oil, as is the case in many African countries, I felt much obliged to learn more about the phenomenon and share that knowledge with my fellow compatriots. And why shouldn’t we become worried and join hands to find out what this ‘Resources Curse’ is and how much chance do we stand as a new state to protect our people from it when South Sudan is 98% dependent on Oil revenues?

It is my hope that this article will trigger the urge to find more on the topic, and initially you can have a read to the material written by a visiting fellow at the University of Pennsylvania, John Ghazvinian who is also the author of Untapped: ‘The Scramble for Africa’s Oil.’

“Since 1990 alone, the petroleum industry has invested more than $20 billion in exploration and production activity in Africa. And, “A further $50 billion will be spent between now and the end of the decade, the largest investment in the continent’s history,” Professor Ghazvinian said. “Unfortunately most Africans on the ground are seeing little benefit from this influx of oil drillers and investment,” the Professor lamented. This he attributed to an economic paradox, known as the ‘Resource Curse’ in which Africans are hurt by the exports of their countries oil.

However he gave us this example which drew my attention even further:

“Consider Gabon, which produces about 300,000 barrels of oil a day.”It’s covered with tropical rainforest, but it’s hard to find bananas that are grown there. They are mostly imported from Cameroon. At one point, Gabon was the world’s largest per-capita importer of champagne.” The oil — and the champagne — will eventually run dry. Gabon, with relatively small reserves, is already coming to terms with that possibility. By then, much of the rest of the country’s economy may have atrophied, “Ghazvinian says.

My fellow compatriots all that I request of you is to take a time out and re-construct the above example putting our new state of South Sudan in the place of Gabon. Don’t we have the huge rainforests and are we still not finding it hard to get locally grown fruits and vegetables in our biggest open market of ‘Konyo Konyo’ in Juba the capital city? Like Gabon which imports its food mostly from Cameroon, we in South Sudan are entirely dependent on Uganda for food. As for the champagne it is needless to talk about it for all is set to dry sooner or later. By the way Gabon produces 300,000 barrels of oil a day just more or less as we do.

Astonishing to me further was the parallel drawn by the professor to rest his argument. I quote:

“Between 1970 and 1993, countries without oil saw their economies grow four times faster than those of countries with oil,” Ghazvinian notes, adding that oil exports inflate the value of a country’s currency, making its other exports uncompetitive. At the same time, workers flock to booming petroleum businesses, which saps other sectors of the economy. “Your country becomes import-dependent,” he says. “That decimates a country’s agriculture and traditional industries.”

Importantly though is a fact that the ‘Resource Curse’ is not unique to the African continent for it was also observed in the Netherlands after the natural gas was discovered in the 1960s and the country’s manufacturing sector withered as the gas industry grew owning it the name “ the Dutch Disease”. This part here shouldn’t be taken as an excuse not to take the issue seriously, but rather it confirms how real ‘Resource Curse’ is or “the Dutch Disease” whichever way you like to call it.

Besides the established reality that the exploitation of valuable natural resources can result in the ‘Resource Curse’ or “ Dutch Disease, where a country’s other industries become less competitive as a result of currency valuation due to the revenue raised from the resource. Countries that are rich in natural resources are paradoxically usually worse off than countries that are not and according to another equally renowned economist Collier (author of the Bottom Billion); this can be attributed to a variety of other causes.

First Collier stated that resources make conflict more likely and we have an example of this during the second civil war and is again being reproduced in the North-South borders disputes even after South Sudan has attained its sovereign status. Khartoum continues to hold fast on the Abyei territory of the Dinka Ngok (Southern tribe) because of oil and the vast natural pastures on one hand while on the other it wants to unjustifiable claim the regions of Kafia Kinji and Hufrat el Nahas in the remote Raja district of the Western Bahr Ghazal state. Many agricultural areas around the Megainis Mechanised Agricultural schemes and others bordering South Kordofan and the White Nile states of North Sudan are all areas that the North annexed as early as 1960 and they actually belong to the South.

However the biggest problem with our ‘Natural resources’ driven economy is that the government in most instances doesn’t have to tax the citizens in order to raise the money budgeted for services or the running of the state and because of this citizens become less inclined to demand financial accountability from the government. There is a truth in that as the government no longer depend on income taxes it therefore doesn’t have to do what the citizens want. According to Professor John Ghazvinian, “The state no longer functions as an engineer of economic growth, but a gravy train. None of the money gets down to the people”. He added.

You cannot discuss the ills of development in Africa without discussing the corrupt politicians who also have their role in making worse a situation which is already appalling, can you? Money in general if not well managed tends to corrupt, nonetheless oil money tends to corrupt politicians even the quickest. What they do instead of looking for ways to invest in the country’s future long-term prosperity, people are fast to pocket the finite petroleum riches.

In the case of South Sudan, the many Western countries that pose as friends should understand that they also have their share of the blame for the rampant corruption that will soon cripple the country. Our local politicians once they pocket public funds, these monies are quickly transferred into accounts in Western banks where unfortunately the Western bankers and their governments turn blind eyes pretending not to have seen nor heard anything. The people of Africa have since known this fact and our poor people in South Sudan are no exception for many are now aware that the rampant poverty in the African continent is but a result of both an internal and an external conspiracy.

Thank God that we don’t have to invent the wheel to address this issue, for what we need to do is to find out who are those successful with resources in this world? There must be some, and Norway they say is the best example. It is the third largest oil producer in the world, after Saudi Arabia and Russia, but they say it is saving its money in pension funds which is already now at $300 billion.

It is common sense that no way can we be compared to the Norwegians when we are still starting with almost a nonexistent infrastructure. Again Norway is a homogenous society of only 5.0 million people and it was already well advanced in terms of infrastructure when they discovered oil. However with good knowledge, good governance and proper planning we can be able to avoid the route taken by “Gabon” and be able to safeguard the interests of the future generations.

The Author: Dr. Justin Ambago Ramba. Secretary General – United South Sudan Party (USSP). He can be reached at: [email protected] or [email protected]